SKOWHEGAN — Residents will vote on a tax break for a natural gas pipeline developer sooner than they thought.

Instead of taking up the issue of a tax-increment financing district at their June town meeting, residents now will make the decision at a special town meeting on Feb. 14.

Selectmen voted unanimously to speed up the process on Tuesday, after listening to a half-hour presentation by Richard Silkman of Portland-based Kennebec Valley Gas Co., which is attempting to build an $85 million natural gas pipeline through central Maine.

At Tuesday’s meeting at the municipal building, Town Manager John Doucette Jr. asked Silkman why he wanted to move quickly.

“We have said from the beginning we wouldn’t do it until June,” he said.

Silkman responded that the TIF deals are a major component of the company’s financing plan, and without them it cannot complete the rest of the steps to build a pipeline.

Kennebec Valley Gas wants to provide natural gas to end users by 2014. To do that, construction needs to be completed in 2013, Silkman said. Because some equipment parts take up to a year to make, they have to be ordered in 2012.

However, the company cannot begin purchasing or construction until it receives final approval from the Maine Public Utilities Commission, and it won’t receive that approval until it can present a financing plan.

“We need to have that certainty, and we can’t have that certainty until we have the TIFs approved or not,” Silkman said.

The TIF district would allow Skowhegan, in addition to 11 other communities, to redirect a percentage of the new property taxes generated by the pipeline back to the developer to help the project’s financing. The district also acts as a tax shelter, so increased property values in a specified area don’t result in increased tax commitments.

Communities can use the percentage of new property taxes they keep for economic development.

If Skowhegan opted to wait until June to decide on the TIF, Silkman said, Kennebec Valley Gas would plan for the pipeline to run only to Sappi Fine Paper and not continue into the downtown, until later when the company could return and finish the project with a TIF in place.

The TIF agreements, which would last 15 years, are essential because they would provide the company with a way to meet its debt obligations during the first years when businesses are switching their heating systems to natural gas, Silkman said.

While the large industrial users, such as Huhtamaki Packaging in Waterville and Fairfield, Sappi and Madison Paper Industries, probably would switch as soon as the line was operational, it probably would take years for smaller users to convert their systems. In that time, the company still would have to make its loan payments.

“Initially, it takes awhile to get conversions,” he said. “We need the TIF in order to build this distribution pipe.”

Currently, the line in Skowhegan is proposed to run down Route 104, possibly to serve Redington-Fairview General Hospital and both New Balance locations. A spur would cut down Varney Road to Sappi.

It may cross either the foot bridge or the Margaret Chase Smith Bridges to go up Madison Avenue to the Hannaford supermarket.

Selectman and Vice Chairman Newell Graf asked Silkman whether the pipeline would provide gas to Skowhegan schools. A borrowing package of up to about $2 million for a biomass boiler system to burn wood pellets already has been approved to heat Skowhegan Area High School and nearby Bloomfield Elementary School.

Silkman said he needed to talk with school district officials to learn whether they are interested in natural gas.

Graf also asked whether Sappi would require a high-pressure or a low-pressure line.

Silkman said the company has designed Sappi’s system for a high-pressure line, but “we’re waiting to hear from them on that issue.”

In total, the pipeline would send an amount of natural gas per year into central Maine that would be the energy equivalent of 20 million barrels of oil. It would run through about 56 miles of 8-inch-diameter pipe.

The pipeline would be on the west side of the Kennebec River from Richmond to Madison, with distribution lines at points along the main line to serve industrial, commercial and institutional customers.

It would hook up to the Maritimes and Northeast compressor station in Richmond. Maritimes and Northeast obtains its natural gas mainly off Sable Island in Nova Scotia.

Augusta, Fairfield and Oakland have approved TIFs. Hallowell and Waterville have voted in their first readings to approve TIFs and have a couple more votes to take.

Farmingdale voted not to approve the TIF, so Kennebec Valley Gas announced it would not build the 2.5 miles of distribution pipeline planned there. Madison has said it will not approve a TIF.

In addition to Skowhegan, the remaining communities are Richmond, Gardiner, Sidney and Norridgewock.

Under the proposed TIF agreement, 80 percent of new property taxes the first 10 years would return to the developer and 20 percent to the towns. For the next five years, 60 percent would return to the developer and 40 percent to the towns.

After that, the communities would keep 100 percent of the tax revenue, throughout the useful life of the pipeline.

Erin Rhoda — 612-2368

[email protected]

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